Trends in Private Investment in Developing Countries: Statistics for 1970-2000 and the Impact on Private Investment of Corruption and the Quality of Public Investment (Discussion Paper)

INTERNATIONAL FINANCE CORPORATION

DISCUSSION PAPER NUMBER 44

Trends in Private Investment in Developing Countries Statistics for 1970-2000

and the Impact on Private Investment of Corruption and the Quality of Public Investment

Stephen S. Everhart Mariusz A. Sumlinski The World Bank Washington, D.C.

Copyright 02001 The World Bank and International Finance Corporation 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing September 2001 123404030201 The International Finance Corporation (IFC), an affiliate of the World Bank, promotes the economic development of its member countries through investment in the private sector. It is the world’s largest multilateral organization providing financial assistance directly in the form of loan and equity to private enterprises in developing countries. To present the results of research with the least possible delay, the typescript of this paper has not been prepared in accordance with the procedures appropriate to formal printed texts, and the IFC and the World Bank accept no responsibility for errors. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the IFC or the World Bank, or to members of their Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. Some sources cited in this paper may be informal documents that are not readily available. The material in this publication is copyrighted. The World Bank encourages dissemination of its work and will normally grant permission promptly. Permission to photocopy items for internal or personal use, for the internal or personal use of specific clients, or for educational classroom use, is granted by the World Bank, provided that the appropriate fee is paid directly to Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, U.S.A., telephone 978-750-8400, fax 978-750-4470. Please contact the Copyright Clearance Center before photocopying items. For permission to reprint individual articles or chapters, please fax your request with complete information to the Republication Department, Copyright Clearance Center, fax 978-750-4470. All other queries on rights and licenses should be addressed to the World Bank at the address above or faxed to 202-522-2422. ISSN. 1012-8069 (IFC Discussion Papers) ISBN: 0-8213-5010-2

Stephen S. Everhart is a Senior Economist and Mariusz A. Sumlinski is an Economist in the IFC Economics Department Library of Congress Cataloging-in-Publication Data has been applied for.

Table of Contents Foreword ...........................................................................................................................

v Abstract ......................................................................................................................... vii.. Chapter 1. Trends In Private and Public Investment ........................................................

1

Chapter 2 . Private Investment: the Impact of Corruption and the Quality of Public Investment ........................................................................................ I . The Nature of Corruption and Its Effects on Private Investment .......................

7 7

I1. Public Investment and Corruption: Is There an Interaction Effect? .................. 8 I11. The Link Between Private and Public Investment ..............................................

9

IV . Econometric Analysis .......................................................................................

14

V . Conclusions .......................................................................................................

19

References ........................................................................................................................

21

Appendix A . Inter-Temporal Dynamics: Private Investment/GDP .................................

27

Appendix B . Methods and Sources ................................................................................. 29 Appendix C . Country Charts ............................................................................................

31

Sub-Saharan Africa .........................................................................................

33

Latin America and the Caribbean ....................................................................

37

Middle East and North Africa .........................................................................

43

Europe and Central Asia ..................................................................................

45

East Asia ..........................................................................................................

49

South Asia .......................................................................................................

53

...

111

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Foreword This twelfth annual edition of Trends in Private Investment in Developing Countries presents annual data on private and public investment for 63 developing countries. The report attempts to fill a gap in data collection and analysis. Information on the breakdown of total investment into its public and private components is not readily available from standard national account statistics. Where it may be available, the concept of public investment is not always precise. Most standard measures classify capital expenditures of state-owned enterprises as private investment. In contrast, the definition used here counts all investment undertaken by the public sector-including through state enterprises-as public sector investment. It is based on data compiled by the World Bank and IMF.

Director, Ecdnomics Department and Economic Adviser of the Corporation

V

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Abstract The 2001 edition of Trends in Private Investment in Developing Countries continues the investigation of the relationship between public and private investment. The focus this year is on the quality of public investment, its interaction with corruption, and the resulting impact on private investment. The first chapter provides descriptive statistics, reporting trends in private and public fixed investment in 63 developing countries. This year, coverage of the Eastern Europe and Central Asia Region has been substantially expanded. In addition, a few smaller economies have been added to the Latin America and the Caribbean sample. On average, the ratio of private investment to GDP declined in 1999 from 15 percent to 14.1 percent of GDP compared to 1998, and from 16.2 percent to 15.7 percent in weighted average terms. Public investment increased from 7.3 percent to 7.5 percent of GDP in simple average terms, and remained at the 1998 level in weighted average terms. The 1999 decline brings investment ratios back to their 1995 level. Preliminary and incomplete estimates for the year 2000 suggest that private investment may be poised for a return to growth. The second chapter examines whether higher levels of public investment are associated with higher or lower levels of private investment, the impact of corruption on this relationship, and the long-run implications for growth and sustainable development. The paper provides evidence consistent with the hypothesis that corruption lowers the quality of public investment and that this reduced quality of public investment is associated with lower private investment. These findings have important implications for policymakers and private investors. Policymakers have further evidence to justify anticorruption campaigns in their countries. Private investors may use these findings to determine where the best opportunities are today-and as the business climate in emerging markets changes, where to invest tomorrow.

vii

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Chapter 1. Trends in Private and Public Investment In 1999, the latest year for which national accounts data exist, private investment in the 60 countries included in the data set fell slightly below the 1998 level, in both average and in GDP weighted terms.' (For a discussion of the definitions, methods, and sources used in this publication, see appendix B.) Meanwhile, public investment increased slightly on average, but remained level in GDP weighted terms.2 The ratio of average private investment to GDP fell to 14.1 percent (15.7 percent in GDP weighted terms) in 1999 (see figure 1.1). Public investment, on the other hand, increased on average to 7.5 percent of GDP from 7.3 percent in 1998 but remained at 8.2 percent of GDP in 1998-99 in GDP weighted terms (see figure 1.2). Figure 1.I. Private Investment in Developing Countries, 1970-2000 +Simple

average -Weighted

average

Note: This volume reports 2000 projections for about half the sample, which represents 50 percent of GDP of the fill sample. These projections should be considered very preliminary and should be treated with caution. This document focuses on 1999 results.

This volume reports 2000 projections for about half the sample, which represents 50 percent of GDP of the fill sample. These projections should be considered very preliminary and thus should be treated with caution. This document focuses on 1999 results. Investment refers to gross domestic fixed investment, and encompasses both national and foreign from whatever finance source investment.

1

Figure 1.2. Public Investment in Developing Countries, 1970-2000 tSimple average -Weighted

average

20

5

Note: This volume reports 2000 projections for about half the sample, which represents 50 percent of GDP of the full sample. These projections should be considered very preliminary and should be treated with caution. This document focuses on 1999 results.

Regional Trends Regional trends mirrored the overall figures, with the exception of the Sub-Saharan Africa and Middle East and North Africa regions, as shown in figures 1.3 through 1.6. Most notably, it appears that East Asia is still suffering the aftershocks of the financial crisis which erupted in 1997, with private investment continuing to decline in 1999, both in average and GDP weighted terms and public investment declining as well in 1999. In Latin America and the Caribbean, South Asia, and Europe and Central Asia, private investment fell and public investment rose slightly in 1999. Figure 1.3. Private Investment by Developing Region, 1970-2000 (weighted averages)

5

0

: 2

Figure 1.4. Private Investment by Developing Region, 1970-2000 (simple averages)

20

a

0

15

(3

10

5

I d E a s t A s i a ---A-- ECA-LAC

+MENA

-South

Asia U S S A F R I

Latin America and the Caribbean (LAC). In 1998, Latin America and the Caribbean led all other regions in private investment growth. However, in 1999 the ratio of private investment to GDP fell by one percentage point, to 15.1 percent of GDP on average. The ratio of public investment to GDP went up by a half percentage point on average, and reached 7.2 percent of GDP in 1999. In GDP weighted terms, LAC’S public investment figures were the lowest of all the regions in 1999, at 3.3 percent of GDP, down by almost half a percentage point from 1998. The largest LAC economies in the sample reported declining private investment to GDP ratios. In Argentina, private investment as a share of GDP decreased by almost two percentage points, in Brazil by less than a half percentage point, in Chile and Colombia by more than four percentage points, and in Republica Bolivariana de Venezuela, by almost two percentage points. Mexico recorded an increase of more than half a percentage point. The balance of the LAC countries in the sample recorded modest increases in private investment as a share of GDP.

3

Figure 1.5. Public Investment by Developing Region, 1970-2000 (weighted averages)

20

1-

East Asia

---A--ECA

*LAC

+MENA -South

Asia

U SSAFR

I

Figure 1.6. Public Investment by Developing Region, 1970-2000 (simple averages)

25 20

i t A ~~

/-East

Asia

---A--

ECA -+-LAC

+MENA

-South

Asia U S S A F R I

Sub-Saharan Africa. Private investment on average continued its moderate increasing trend for the third year in a row in 1999, reaching 11.3 percent of GDP. In GDP weighted terms, however, private investment declined slightly in 1999 to 10.6 percent of GDP from 11.1 percent in 1998. Public investment in Africa remained level in simple average terms and declined by almost one percentage point in weighted average terms. Private investment increased in Cote d'Ivoire and Mauritius, but remained flat or nearly flat in Benin, Guinea-Bissau, Madagascar and Seychelles. The remaining African countries covered in the data set recorded declines in private investment to GDP ratios.

4

South Asia. Private investment fell as a proportion of GDP in 1999, both in average and GDP weighted terms, but minimally. Nevertheless, private investment is expected to keep increasing in importance in this region, as it has done for more than 25 years. Private investment increased in Bangladesh, declined in India, and remained nearly flat in Pakistan. Public investment on average and in GDP weighted terms followed a declining trend as well, and remained at a level of about half of private investment. East Asia. The region’s average private investment ratio declined in 1999 for the third year in a row to a level last recorded in 1985. The fall, however, was not as dramatic in GDP weighted terms. Not surprisingly, the most prominent declines in private investment were registered in the crisis countries: Indonesia, Republic of Korea, Malaysia, and the Philippines. Private investment increased in Cambodia but remained flat in China (although at a high level) and Thailand. Public investment increased only slightly on average and in GDP weighted terms. In 1999, East Asia had the highest average level of public investment to GDP among the regions, exceeding the global average by almost 2 percentage points. Eastern Europe and Central Asia (ECA). Private investment in 1999 declined on average to 14.3 percent of GDP from the high of 15.9 percent in 1998, declining in GDP weighted terms as well. The largest declines were recorded in Azerbaijan, Estonia, Turkey, and Uzbekistan. Bulgaria, Poland, and Romania reported increasing private investment to GDP ratios. Public investment in this region remained flat on average in 1999, at a level of 6.8 percent of GDP, declining slightly in GDP weighted terms. The Middle East and North Africa (MENA). Private investment increased slightly in 1999 to 14.1 percent of GDP on average. In GDP weighted terms, investment remained flat over 1998-99 period. Egypt and Morocco recorded increases in the private investment to GDP ratios, while Iran and Tunisia remained virtually flat. Public investment went up on average (in GDP weighted terms as well), to 8.8 percent of GDP. Individual country trends are shown in appendix C, along with the statistics. Table 1.1 lists private investment ratios by country, listing them in descending order as of 1999 and comparing them to 1980 and 1990 (when data are available). Ratios for 2000 are also presented; as noted, these should be considered very preliminary and thus treated with caution.

5

T a b l e 1 . 1 . P r i v a t e I n v e s t m e n t in 1 9 8 0 , 1990, 1999 a n d 2 0 0 0 ( p e r c e n t o f G D P ) 1980 1990 1999 2000

Seychelles K icaragua Korea, Republic of IM auritius

14.8

I I 2 25.5 14.9

32.2 19.2

D o m inica

10.5

20.8 16.4 8 3 13.8 12.9 17.6 15.8 9.4 9.8 13.9 10.4

16.1 15.5 14.9 14.8

11.2

18.4

14.5

25.7

19.2

14.2

13 3 18.5

19 7 15 5 16 7 11.2 8 5 19.5 18.9

13 1 13.1 13.0 13.0 13 0 12.9 12.9

8.5 14.4

12.7 12.6 12.5

1 I .8 3 7 25.1

IP

eru Brazil Turkey Argentina Bangladesh India G uatcm ala Chile IT i t h i i a n i a

Tuniqia Barbados Egypt El Salvador Iran Indonesia Philippines

I

24.8 22.0 22.0 2 1.8

17.0 13.3 19.2 8.2

10.1

18 7 17.3 17 0 16.9 16.8 16.3

16.1

1 9 .(I 17.31 18.61

15.8 17.01 17.0 15.4 15.7 14.0 16.4

I

1 . 4 .7 -

6.4

I I 4 18.8

!Poland uyana

IG

1 1 -1

1 1 .4

13.3 13.3

6 .O 12.9 11.3

12 9 14 0 13.0 19 0

12.81 12.5

II

Bolivia

I

B e n in South Africa IK e n v a 1Uzb;kistan Cambodia

1

fPakistan / Bu l g a r i a

8 8 7.7

8.9 0.8 6.7

I C n m nrns

IPaDua N e w G u i n e a Costa Rica

20.0 14.7

17.7

6

10.6 10.3 10.1 9.7 9.6 8.3

8 .o 7.4

7.5

I

I

8.61

I

7.41

I

I

Chapter 2. Private Investment: the Impact of Corruption and the Quality of Public Investment This chapter focuses on the effects of corruption on public and private investment and their long-term implications for economic growth. Specifically, it raises the question whether corruption affects the quality of public investment and the level of private investment. Three fundamental questions are raised:

.. .

is public investment associated with higher or lower private investment? does corruption influence this relationship? and what may be the long-term implications of these interactions for economic growth?

The chapter first reviews the literature exploring the impact of corruption on private investment. Section two explores the interaction effect between corruption and public investment, section three examines the linkages between private and public investment, section four presents our empirical analysis, and section five concludes. I. The Nature of Corruption and Its Effects on Private Investment

Corruption is a pervasive and universal phenomenon. As witnessed throughout history, corruption can affect democratic and non-democratic countries, rich and poor countries, alike. In very recent times, corruption, or allegations of corruption of some sort, was instrumental in the reorganization of the political system in several countries. There are many types of public corruption, including accepting bribes to shorten processing time, obtain monopoly power, or secure government procurement and contracts. Tanzi (1998) offers a common definition of corruption: the abuse of public power for private benefit.3 Research on corruption has expanded in recent years, yet work investigating its impact on private investment is still in its infancy. Mauro (1995) finds that an aggregate institutional indicator, a “corruption indicator,” is negatively associated with aggregate investment in his sample of countries. Brunetti, Kisunko and Weder (1997) present results from a survey of entrepreneurs that suggest that perceived unreliability of the judiciary, government instability, and corruption negatively influence cross-country differences in aggregate investment. Brunetti and Weder (1997) find that among institutional factors, lack of rule of law, high corruption and real exchange rate distortions are the most detrimental for investment. A number of recent studies have examined the impact of the business environment on investment. Pfeffermann, Kisunko, and Sumlinski (1999) investigated in a limited number of countries the link between private investment and perceived business obstacles in developing countries, obstacles such as corruption, unpredictability of the judiciary,

Theobald (1990) provides a number of definitions of corruption.

7

onerous regulations for starting a business, tax and labor regulations, and others. Countries where these obstacles were perceived to be fewer had higher levels of private investment. One reason why corruption seems to depress investment is that it acts as a tax on private in~estment.~ A “corruption tax” is particularly burdensome for activities such as investment projects that by nature involve a long time horizon and a multiplicity of logistic, administrative and legal steps. Each of these steps is liable to incur corruption taxes, each cascading over the other. The result is an increase in the cost of capital, hence a reduction in anticipated profitability, as well as a relative incentive toward investments involving fewer administrative steps: that is, the tax is distorting, too. Investigating the impact of corruption on private enterprise and public finance is not a new concept, yet quantifying the impact remains e l u ~ i v e A . ~ recent IMF note reports a survey by a resident representative in a CIS country suggesting that almost 40 percent of a new enterprise’s expenses in the first year are “informal payment^."^ Forty percent is likely an extreme case, but table 2.1 below presents some results from a recent OECD/World Bank report that provides estimates of social losses for three eastern European countrie~.~

INDICATOR

ALBANIA GEORGIA LATVIA

Enterprises willing to pay higher taxes if corruption were eliminated

53

71

30

Additional taxes as a share of revenue that enterprises would be willing to pay if corruption were eliminated

11

22

15

Bribes typically paid as a share of firms’ revenue

7

15

7

One implication is that less corruption might translate into more resources available for private investment. In addition, strengthened public revenues as a result of less “leakage” due to corruption could translate into more public services and/or reduced taxes. Most important might be the impact on incentives: with high corruption, investment simply might not occur. II. Public Investment and Corruption: Is There an Interaction Effect?

Tanzi and Davoodi (1997) investigate the impact of corruption on public investment, using infrastructure investment as their proxy for public investment and the See Shleifer and Vishny (1993) and Wei (1997). See Jain (2001) for a review. “Improving Governance and Fighting Corruption in the Baltic and CIS Countries,” IMF Economic Issues Series, No. 2 1,2000. These countries do not represent the extreme in commonly used index measures of corruption. Albania and Latvia are in the “moderate” range of the ICRG corruption index. Georgia is not rated.

8

Political Risk Service’s International Country Risk Guide index as their measure of corruption. They find that corruption tends to increase the number of projects undertaken and to expand their size. Corruption increases the share of public investment to GDP, and also lowers the quality of public investment put in place. The logic behind these findings is straightforward. Infrastructure projects can be large and the implementation is often carried out by private firms. The incentive for the private enterprise to pay a “commission” to secure the contract is strong, particularly when the contract is large. When the approval of investment projects is influenced by corrupt public officials, rates of return and cost-benefit analyses become mere exercises. The firm paying the “commission” is unlikely to bear the cost of the bribe. It is more likely this cost will be recouped in some inefficient way. Perhaps project costs will be pared by adhering poorly to plan specifications or by using poor quality materials or workmanship. Perhaps an “understanding” will be reached with the bribed official that the initial low estimate will be revised upward as the project progresses. Or the bid may be padded initially. In the more rare instances of cost-plus contracting, the firm can hide the bribe expense through overpricing. All of these work to make the public investment in inhastructure more costly and less likely to meet specifications. 8 We investigate the effect on private investment of possible interaction between corruption and public investment empirically in section four.

IIL The Link Between Private and Public Investment There is a growing consensus that private investment is more efficient and productive than public investment, yet the number of studies on the respective roles of private and public investment in developing economies is somewhat limited. Using relatively small sample sizes and limited time series, a number of studies have concluded that private investment has a larger positive impact on growth than public investment, among them, Khan and Reinhart (1990), Coutinho and Gallo (1991), and Serven and Solimano (1990). Khan and Kumar (1997) expand the country coverage over previous works and examine a relatively long time period, 1970-1990. The authors find private and public investment both have a statistically significant positive association with growth. The magnitude differs considerably, however, with private investment having an estimated coefficient almost one-and-a half times as large as that of public investment. Bouton and Sumlinski (2000) confirmed Khan and Kumar’s results and found for a longer period an even larger coefficient on private investment and smaller coefficient on public investment. Thus, the degree of association of private investment with sustainable development and growth appears well established in the economics literature.

* Corruption appears to be particularly problematic in infrastructure investment, see Wade (1982) and RoseAckerman (1996). 9

A more difficult relationship to discern is that between public and private investment. Crowding-in of private investment by public investment is defined to occur when increased public investment is associated with increased private investment. This may arise because public infrastructure provision affects returns on private investment positively, hence enhancing the incentive to carry out such private investment. Crowding out occurs when the opposite is the case. A vast literature covers this subject, some recent works are presented in table 2.2 below. The table suggests that not only is there no consensus on the topic, but there are contradictory results, even for the same regions and countries.

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TABLE2.2. SELECTED LITERATURE REVIEW, CROWDING IN - CROWDING OUT CITATION Oshikoya (1994)

SAMPLE COUNTRIES African

de Oliveira Cruz and Teixeira (1 999)

Brazil

Private investment is crowded out by public investment in the short term, but in the long term these two variables are complements

Clements and Levy (1 994)

Caribbean

lowding out

Blejer and Khan (1984)

Developing

Government investment in infrastructure is complementary to private investment, other types of government investment are not

Balassa (1988)

Developing

Crowding out

Greene and Villanueva (1991)

Developing

Crowding in

Heng (1997)

Developing

Shows that public capital can crowd in private capital by raising the marginal productivity of labor and savings

Ghura and Goodwin (2000)

Developing

- Overall sample suggests crowding in - Public investment crowds in private investment in SSAFR, but crowds

Shafik (1 992)

Mauritius

I------

For most countries in this sample, public investment in infrastructure is complementary to private sector investment

out in Asia and LAC Effects of government policy on private investment are mixed, evidence of crowding out in credit markets and crowding in as a result of government investment in infrastructure Empirics suggest expenditures on health and infrastructure stimulate private investment, expenditure on education does not

Nazmi and Ramirez (1997)

Mexico

Crowding out

Musalem (1989)

Mexico

Crowding in

Looney and Frederiken (1997)

Pakistan

Crowding in

Sakr (1993)

Pakistan

When government investment is disaggregated into infrastructure and non-infrastructure components, the latter crowds out private investment

Ahmed and Miller (2000)

OECD and Developing

- Government expenditure crowds out for both samples, plus pooled

sample

- For developing countries, government expenditure on transport and Argimon, Gonzalez-Paramo. OECD Alegre (1997)

communication crowds in Crowding in effect of private investment by public investment through the positive impact of infrastructure on private investment productivity

I Li---Monadjemi and Huh (1 998) OECD (Australia, UK, USA)

Empirics provide limited support for crowding out effects of government investment on private investment

Pereira and Flores de Frutos USA

Crowding in

USA

Crowding in

USA

- At the aggregate level, public investment crowds in private investment - Disaggregating private investment shows that the crowding in effect of

Pereira (2001)

public investment is strong for equipment and only marginal for structures - Public investment marginally crowds out private investment in information equipment

11

A simple investigation of the relationship between public and private investment is presented in table 2.3 below, where the within-country correlations between public and private investment for all 63 countries in our sample are pre~ented.~ The table shows that there is sometimes crowding out and sometimes crowding in, with an almost even split between the two. This may explain the contradictory findings in the literature (the studies summarized in table 2.2). And it is also important to note that in addition to the axiom “correlation does not prove causation,” its corollary is “partial correlations are not necessarily preserved in a multi-variable framework.” More rigorous testing is therefore presented in the next section.

9

Periods for the correlations vary by country, ranging from the entire sample period of 1970-2000, to as brief as 1995-2000.

12

,BLE 2.3. INVESTMENT Region Income ECA Lower middle Lower middle ECA Low SSAFR ECA Upper middle LAC Lower middle ECA LOW ECA Upper middle LAC Upper middle LAC Lower middle East Asia Low East Asia Low LAC Upper middle Lower middle ECA Upper middle LAC SSAFR Low Lower middle LAC South Asia Low Lower middle MENA Lower middle LAC Upper middle ECA Upper middle LAC Upper middle SSAFR Upper middle LAC LAC Upper middle SSAFR Lower middle LAC Upper middle Lower middle LAC Low SSAFR Upper middle LAC Upper middle LAC Lower middle LAC Lower middle LAC Lower middle ECA Low SSAFR Low South Asia LAC Lower middle Lower middle LAC Lower middle MENA Upper middle East Asia Upper middle LAC SSAFR Low Lower middle LAC East Asia Lower middle Lower middle East Asia Low ECA MENA Lower middle Upper middle LAC Lower middle LAC Lower middle East Asia Upper middle SSAFR Upper middle East Asia Lower middle LAC Low SSAFR Low SSAFR Low LAC MENA Lower middle Low SSAFR East Asia Low South Asia Low Lower middle LAC Low LAC Upper middle SSAFR Lower middle ECA

3RRELATIONS *denotessignificance at 5% lei Private vs. Public Country * Bulgaria -88% Lithuania -83% * Mauritania -77% * Turkey -76% * Bolivia -14% Azerbaijan -70% * -70% Poland * -68% Grenada * -66% St. Vincent * -62% Indonesia * -61YO Cambodia * -57% Mexico -55% Romania * Chile -55% -40% Benin * -39% Belize * Pakistan -36% -35% Morocco -34% Paraguay Estonia -32% Argentina -31% -25% Seychelles -24% Dominica -23% St. Lucia -22% Namibia -21% Brazil -17% Colombia -17% Comoros -17% Barbados -15% Venezuela, R. B. -14% Costa Rica -12% Dominican Republic Kazakhstan -5% Madagascar -4% India -2% -2% Ecuador El Salvador 1Yo 4% Tunisia 6% Korea, Rep. of Uruguay 6% Cote d’Ivoire 8% Guatemala 9% 9% Thailand Papua New Guinea 11% Uzbekistan 15% 17% Egypt Trinidad & Tobago 20% Peru 23% Philippines 24% Mauritius 25% Malaysia 27% Guyana 37% * 38% Kenya * 50% Malawi * Haiti 51% * 52% Iran * 56% Guinea-Bissau * 59% China * 64% Bangladesh * 64% Panama * Nicaragua 67% * 18% South Africa 97% Yugoslavia, Fed. Rep.

I

13

IK Econometric Analysis

This section presents the econometric investigation of the questions of interest for the study. First, we investigate the impact of corruption on public investment; then we continue our investigation of the "crowding-in vs. crowding-out" debate, focusing on the impact of corruption; we conclude this section with the possible long-run implications of the empirical findings of the first two subsections. a) Impact of corruption on public investment

Following Tanzi and Davoodi (1997), we investigate the impact of corruption on public investment by tracing the impact of corruption on the quality of public infrastructure. We measure infrastructure quality through three proxies: paved roads in good condition as a percentage of total roads; electric power system losses as a percentage of total power output; and telephone faults per 100 mainlines per year." A priori, if corruption leads to lower quality public investment, then in more corrupt countries we expect the percentage of paved roads to be lower, and the number of telephone faults and electrical system losses to be higher. The first two measures are available in the World Bank Development Indicators database. Telecommunications faults are from the International Telecommunications Union data base. Our measure of corruption is from the Political Risk Service's International Country Risk Guide. This publication attempts to measure the phenomenon by investigating whether high ranking government officials are likely to demand special payments and if officials in lower levels of government generally expect illegal payments in the form of bribes connected with import-export licenses, exchange controls, tax assessment, police protection, or loans. The ICRG provides a numeric, time-series measure of corruption ranging from zero to six, with higher values indicating less corruption. Studies of corruption using this measure include Knack and Keefer (1995), Svensson (1998), and Tanzi and Davoodi (1997,2000). Regressing the corruption index on each of the proxies for quality of public investment yields econometric results consistent with Tanzi and Davoodi (1997). We are, however, using only developing country economies and cover a longer time period, 1970-1999. Our results are presented in table 2.4 below." As expected, more corrupt countries have more telephone faults per 100 lines, more electrical system losses as a percentage of output, and a lower percentage of paved roads.

lo These proxies are not perfect but they do provide some measure of the quality of public investment, further, a review of the literature reveals few alternative measures available for large numbers of developing countries. " Tanzi and Davoodi also control for per capita GDP and find, unsurprisingly, that countries with higher per capita GDP tend to have better quality infrastructure. They present a number of other specifications and control variables, with mixed results.

14

TABLE2.4. THEEFFECT OF CORRUPTION ON QUALITY OF INFRASTRUCTURE Telephone faults per Roads, paved Electric power transmission and distribution Dependent variable 100 main lines (% of all roads) losses (% of output) Constant 129.6 20.2 19.8 -1.7

Note: Shaded cells are t-statistics. a Higher index indicates less corruption.

b) Crowding-in vs. crowding-out and the impact of corruption

In specifying a model to investigate the impact of public investment and corruption on private investment, a survey of the literature provided an array of techniques, possible control variables, and specifications.'2 After investigating of a number of specifications, the following model was selected: Concept I, 1 GDP =

(Ip / GDP)-i Broad MoneyIGDP External Debt/GDP CAEVGDP (Ig/ GDP)*Cormption I,/ GDP constant

lagged private investment to GDP financial deepness, availability of credit debt overhang external balance interaction between corruption index, public investment public investment to GDP: crowding idout all other effects

Lagged private investment is undoubtedly a significant component in current private investment, hence it is an obvious choice for the model. The next three variables: broad money to GDP, external debt to GDP, and the current account balance to GDP, are

l 2 Considerable debate exists in the econometrics literature about the proper unbalanced panel data technique. As our interest lies more with the economics than the econometrics of the investigation, we have chosen to present the standard OLS, or pooled least squares estimates, as well as the random effects results (which are virtually the same). Hausman (1978) and Wu (1973) tests suggest random effects specification is indicated over fixed effects. The results of the Breusch-Pagan (1980) test for choice between OLS and random effects indicated OLS is the proper specification. For a review of issues in panel data estimation, see Arellano and Bover (1995), Ahmed and Miller (2000), Baltagi (1995), Bhargava and Sargan (1983), Boehmer and Megginson (1990), Cashel-Cordo and Craig (1990), Chang (1979), and Pesaran and Smith (1995).

15

included as control ~ariab1es.l~ The variables of interest for our research are the interaction term between on one hand, public investment to GDP and the corruption index, and on the other, public investment to GDP. The full sample results are presented in table 2.5 below. As one would expect, lagged private investment is highly significant. Its steadiness over time as a share of GDP virtually assures the significance. Broad money, our measure of the financial depth of the economy, is also significant. The debt overhang is also significant, with the expected negative sign. The significant negative coefficient on the current account balance is consistent with our expectations. A higher level of private investment is associated with an increased current account deficit (or a reduced surplus). Note that private FDI typically finances a large portion of the current account in emerging economies. TABLE2.5. PRIVATE INVESTMENT, CORRUPTION, AND CROWDING OUT :FULLSAMPLE RESULTS Independent variable Means RE Constant 1.548

PLS 1.704

External debt/GNP

Note: Shaded cells are t-statistics. a Higher index indicates less corruption.

The primary relationships of interest for this research, the interaction between public investment and corruption, and the measure of crowding-out vs. crowding in, are also significant and of the “correct” sign. The explanation is as follows: We know from Tanzi and Davoodi (1997) that corruption is associated with poor quality public investment, consistent with our own results, summarized in table 2.4, and that it also inflates public investment levels. These effects are captured in our model by two variables. First, controlling for the other variables in the model above, a higher level of public investment is associated with a lower l 3 A review of the literature reveals numerous possible determinants of investment and possible control variables. Some authors have used institutional factors such as education or civil unrest as control variables but we have chosen to limit the variables to those we consider most germane for the questions of interest. Useful references include Bier (1992), Blejer and Kahn (1984), Bouton and Sumlinski (2000), Brunetti and Weder (1997), Cardoso (1993), Fischer (1991, 1993), Ghura and Goodwin (2000), Greene and Villanueva (1991), Larrain and Vergara (1993), Oshikoya (1994), Ozler and Rodrik (1992), Sakr (1993), Serven and Solimano (1992), and Solimano (1989).

16

level of private investment, i.e., crowding out. The negative relationship is statistically significant. Second, the interaction between the corruption index and the level of public investment captures the indirect effect of corruption via its impact on the quality of public investment. The coefficient on the (Public inv./GDP)*Corruption variable is positive and statistically significant. A larger value for the corruption index signifies less corruption, which implies that any given level of public investment will be of higher quality than it would be with higher corruption (a lower index). Less corruption leads to higher quality public investment, and this is associated with a higher level of private investment.

In summary, the evidence comes out in favor of the crowding out hypothesis, with the crowding out stronger in the presence of corruption. It is important to note, however, that due to data limitations, we were only able to work with figures for total public investment. Numerous studies14 have shown that certain types of infrastructure and public investment facilitate both growth and private investment. Table 2.6 below presents regional results. With the exception of Africa, all conclusions are similar to the overall sample discussion presented above. The positive coefficient on the interaction term for all regions except Africa suggests that public investment typically has a negative influence on private investment. Why then should African public investment be associated with a higher level of private investment (ie., crowds-in)? One possible explanation is that the low initial endowment of capital means that the addition of any investment, regardless of quality, yields high returns.

14

Easterly and Rebelo (1993) find that public investment in communication and transport infrastructure has a strong positive effect on growth. Infrastructure such as paved roads, telephone density per worker and adequate electricity generation have been found to have a strong effect on subsequent growth (Easterly and Levine 1997, Canning 1999, Canning and Bennathan 2000). Odedokun (1997) shows that in developing countries, public investment in infrastructure facilitates private investment and growth, whereas noninfrastructure public investment has the opposite effect.

17

TABLE2.6. PRIVATE INVESTMENT, CORRUPTION, AND CROWDING OUT : REGIONAL RESULTS Independent variable Full LAC ASIA SSAFR ECA Sample Constant 1.704 2.680 4.451 3.944 3.953

MENA

2.989

External debt/GNP

-0.006

-0.008

-0.034

-0.016

0.001

0.019

Current account balance/GDP

-0.137

-0.183

-0.138

-0.061

0.089

-0.006

(Public inv./GDP)*Comption

0.022

0.042

0.033

-0.190

0.022

0.018

Public investment/GDP Note: Shaded cells are t-statistics. Method of estimation: pooled least squares.

c) Long-run implications of the empirical findings

Of particular interest to policymakers and private investors are the long run consequences of their investment decisions. We find that in the full sample, public investment tends to crowd out private investment in the short-run analyses presented in tables 2.5 and 2.6. If the ‘crowding-out in the presence of corruption’ finding is correct, then estimates of the long-run negative impact of any increase inpublic investment on the level of total investment would provide additional ammunition for policy-makers intent on combating corruption. We solve for long-run effects by performing a Koyck’’ transformation on equation (1) above, the details are provided in appendix A. This transformation changes the short-run effects of table 2.6 into the long-run effects presented in table 2.7 below. In table 2.7 the short-run effects of each variable from table 2.6 (full sample results) are presented above the Koyck-transformed, long-run effects.

l5

See Koyck (1954) and Evans (1969).

18

TABLE 2.7. PRIVATE INVESTMENT DYNAMICS: LONG-AND SHORT-RUN EFFECTS

TABLE2.8. IMPACT ON PRIVATE INVESTMENT OF 1% POINT RISE IN PUBLIC INVESTMENT

Full Sample 1.704

Independent Variable Constant Private investment/GDP lagged

Long-Run Coefficient

Direct effect

Indirect Effect via Interaction Term

-1.408

0.191

Total Effect

0.886 SR LR

0.020 0.178

Level of Corruption High

(index=O)

-1.41

0.00

-1.41

SR LR

-0.006 -0.055

Middle

(index=3)

-1.41

0.57

-0.84

Low

(index=6)

-1.41

1.14

-0.26

Current account balance/GDP

SR LR

-0.137 -1.203

(Public Inv./GDP)*Corruption

SR LR

0.022

SR LR

-0.160

Broad money/GDP External debt/GNP

Public investment/GDP

0.191 -1.408

I

I

Table 2.8 and figure 2.1 present the long-run impact on private investment of a 1 percentage point rise in public investment. With high corruption, a 1 percentage point increase in public investment leads to a 1.41 percent decline in private investment, resulting in a 0.41 percent decline in total investment. When corruption is low, crowding out still occurs but the decline in private investment is only 0.26 percent of GDP. This value is, however, not statistically different from zero. Thus in an environment of low corruption, there may well be no crowding out.

F i g u r e 2.1. I m p a c t o n P r i v a t e I n v e s t m e n t o f 1% P o i n t R i s e i n P u b l i c I n v e s t m e n t

0.00 P

f:

4.20

-0.40

--

Y O

:.

8

-0.60

P .

.-c

Q J =

* *

m c E m .c

0: c

-

-0.80

-1.00 -1.20 -1.40 -1.41 -1.60

High (index=O)

Middle (index-3)

Low (index=B)

Corruption Level

V. Conclusions This paper provides evidence consistent with the hypothesis that corruption lowers the quality of public investment, and this poor quality public investment is associated with lower private investment. The result is that if a highly corrupt country raises the level of public investment, the productivity of the new public investment put in place is low, and private investment falls. It also appears from the data that as this poor

19

quality public investment is put in place, private investors are able to discern the difference and react by reducing their investment. These findings have important implications for policymakers and private investors. Policymakers have further evidence to justify anti-corruption campaigns in their countries, as long-term growth depends on the flow of private investment, as well as on the flow of good quality public investment. Private investors may use these findings to determine where the better opportunities are today-and as the business climate changes in emerging markets, where to invest tomorrow.

20

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. 2001. “On the Effects of Public Investment on Private Investment: What Crowds in What?” Public Finance Review 29( 1):3-25. Pesaran, Hashem M. and Ron Smith. 1995. “Estimating Long-run Relationships from Dynamic Heterogeneous Panels.” Journal of Econometrics 68( 1):79-113. Pfeffennann, Guy, Gregory V. Kisunko, and Mariusz A. Sumlinski. 1999. “Trends in Private Investment in Developing Countries: Statistics for 1970-97.” IFC Discussion Paper 37, Washington, D.C. Podrecca, Elena, and Gaetano Carmeci. 2001. “Fixed Investment and Economic Growth: New Results on Causality.” Applied Economics 33(2): 177-182. Reinikka, Ritva and Jakob Svensson. 1999. “How Inadequate Provision of Public Infrastructure and Services Affects Private Investment.” Policy Research Worlung Paper 2262, World Bank, Policy Research Department. Washington, D.C. Rose-Ackerman, Susan. 1996. “Second-Generation Issues in Transition: Corruption.” Annual World Bank Conference on Development Economics. 1995:373-78.

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Sakr, Khaled. 1993.“Determinants of Private Investment in Pakistan.” IMF Working Paper 30. Washington, D.C. Sawides, A. “Economic Growth in Africa.” 1995.World Development 23(3):449-58. Semen, Luis, and Andres Solimano. 1990.“Private Investment and Macroeconomic Adjustment: Theory, Country Experience and Policy Implications.” World Bank, Washington, D.C.

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26

Appendix A. Inter-Temporal Dynamics: Private Investment/GDP The long-run consequences of investment decisions are of particular interest to policymakers and private investors. We can solve for long-run effects by adding a lagged dependent variable to the explanatory variables in our model via a Koyck transformation.16 This allows for an investigation of the short- and long-run impact of independent variables. Assume that the long-run equilibrium level of our dependent variable is determined as in equation (1) below: Y* = a + bXt,

(1)

where b is a vector of long-run effects. Assume further that the adjustment process is described by equation (2) below. Investment levels change between periods but do not equilibrate in a single period, changing only by some proportion, d, of the gap between the previous period’s output and the equilibrium level, Y : Yt - Yt-l = (l-d)(Y: - Yt-l) + et where d is the inter-temporal adjustment coefficient, and et is the error term Substituting (1) into (2) and collecting terms yields: Yt= (1-d)a + (1-d)bXt + dYt-l + et

(3)

where (1-d)b is the vector of short-run effects. Then, using an estimate of the inter-temporal adjustment coefficient d, which is equal to a coefficient on the lagged dependent variable, and estimates of (1 - d)a and (1 - d)b, which are equal to the respective estimates of a constant and coefficients on independent variables, we solve for long run effects. Estimates of long run effects are reported in table A1 below.

16

See Koyck (1954), Evans (1969).

27

TABLEA l .

PRIVATE INVESTMENT DYNAMICS: LONG-AND

Full Sample

Independent variable

SHORT-RUN EFFECTS

LAC

ASIA

SSAFR

ECA

MENA

Constant

1.704

2.680

4.451

3.944

3.953

2.989

Private investment/GDP lagged

0.886

0.807

0.886

0.098

0.865

0.694

0.020 0.178 -0.006 -0.055 -0.137 -1.203 0.022 0.191 -0.160 -1.408

0.023 0.122 -0.008 -0.039 -0.183 -0.947 0.042 0.217 -0.260 -1.346

0.022 0.192 -0.034 -0.297 -0.138 -1.215 0.033 0.286 -0.323 -2.844

0.165 0.183 -0.016 -0.018 -0.061 -0.067 -0.190 -0.211 0.695 0.771

-0.021 -0.152 0.001 0.011 0.089 0.658 0.022 0.161 -0.204 -1.505

-0.002 -0.007 0.019 0.062 -0.006 -0.020 0.018 0.059 -0.069 -0.226

Broad money/GDP External debt/GNP Current account balance/GDP (Public inv./GDP)*Cormption Public investment/GDP

SR LR SR LR SR LR SR LR SR LR

28

Appendix B. Methods and Sources Fixed Investment Data National accounts normally do not break down gross domestic investment into its private and public sector components. When they do, “private” investment often includes investment by state-owned enterprises such as state steel mills and so on. In this publication, we attempt to determine total public investment, inclusive of public investment undertaken by any state-owned enterprises. Private investment is then defined as the difference between total gross domestic investment (from national accounts) and consolidated public investment. Consolidated public investment data for each country were compiled mainly from World Bank Country Economic Memoranda, Public Investment Reviews, Public Expenditure Reviews, and other World Bank country reports. They reflect efforts by World Bank missions to compile public sector data. Where World Bank data were not available, country data were used. The countries included in this edition represent all the developing countries for which the relevant data are available. Minor changes were made in the last two or three years for most countries because of revisions in their national accounts data. Updates are not available for Costa Rica, Mauritania, and Papua New Guinea. Appendix C presents figures for each country in the sample displaying patterns of private fixed investment (PRIVATE VGDP) and public fixed investment (Public VGDP) from 1970 to 2000. The underlying data for these figures appears in table C.1, along with ratios on total fixed investment (GDFVGDP). The ratios are computed using local currency units at current prices.

29

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Appendix C. Country Charts

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Sub-Saharan Africa Benin Comoros CBte d’Ivoire Guinea-Bissau Kenya Madagascar Malawi Mauritania Mauritius Namibia Seychelles South Africa

33

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TABLEc1. ountrymear rgentina

Azerbaijan

Bangladesh

Barbados

Belize

Benin

I bDFllGDP PrivateVGDP PublicllGDP GDFllGDP Private IlGDP Public IlGDP GDFllGDP Private IlGDP IPublic IlGDP Private IlGDP Public IlGDP GDFllGDP Private IlGDP Public IlGDP GDFVGDP Private IlGDP IPublic IlGDP

IGDFVGDP

Brazil

Private I/GDP Public IlGDP GDFllGDP Private UGDP /PublicllGDP

I -

Cambodia

Chile

China

I

I

IGDFVGDP I

Bolivia

ulaaria

I1970 1971 1972 1973 1974 1975 1976 1977 21.2 20.9 20.7 18.2 19.3 25.9 26.8 27.2 13.1 12.8 12.5 11.6 12.5 16.1 15.1 15.0 8.1 8.1 8.2 6.6 6.8 9.8 11.7 12.2

JGDFVGDP

h a .t..e IVGDP .~ IPublic IlGDP

3.0 2.9 0.1

7.1 4.2 2.9

6.3 3.4 2.9

9.9 11.1 5.4 4.9 4.6 6.2 23.7 19.7 4.0 26.2 23.5 27.1 25.3 28.7 28.0 17.8 15.2 14.8 16.6 18.5 16.1 8.4 8.3 12.3 8.7 10.2 11.9

I I

1 I I

18.8 19.7 20.2 21.4 22.8 24.4 22.5 21.3 12.8 14.2 14.4 16.2 15.8 16.9 14.2 14.7 6.0 5.5 5.8 5.2 7.0 7.5 8.3 6.6

I

~GDFI~GDP I Private IlGDP Public VGDP GDFllGDP Private IlGDP PublicllGDP GDFllGDP Private IlGDP Public IlGDP

16.4 14.5 12.2 9.5 6.5 4.5 6.9 8.0 7.7

7.9 21.2 13.9 12.8 14.5 0.5 9.2 3.2 4.8 7.6 7.4 12.0 10.7 8.0 6.9

INVESTMENT AS A SHARE OF GDP (IN %)

1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 24.4 22.7 25.3 22.7 21.8 20.9 20.0 17.6 17.5 19.6 18.6 15.5 14.0 14.6 16.7 19.1 19.9 17.9 13.4 14.1 19.2 16.9 16.6 14.8 14.9 12.5 13.2 15.7 14.4 12.2 9.4 12.7 14.9 18.1 19.1 15.8 11.0 8.6 6.1 5.8 5.2 6.1 5.0 5.1 4.3 3.9 4.3 3.3 4.6 1.9 1.8 1.0 0.8 2.2 15.6 10.7 5.0 11.8 11.3 15.3 23.5 22.6 19.7 18.1 19.1 18.5 19.0 18.4 19.1 17.1 16.9 17.3 17.9 18.4 19.1 5.6 5.7 8.2 13.6 12.4 10.0 9.6 12.7 11.4 11.4 11.5 11.7 9.8 10.3 10.3 11.5 11.8 12.4 6 2 5.6 7.1 9.9 10.2 9.8 8.4 6.4 7.2 7.7 6.9 7.3 7.2 6.6 7.0 6.5 6.6 6.7 22.7 22.2 22.8 27.2 22.8 19.6 16.5 15.1 16.1 15.8 17.3 18.8 18.9 16.2 9.5 12.7 14.5 15.1 18.7 17.5 18.5 22.0 19.5 17.3 15.6 13.3 12.6 13.5 14.9 16.3 15.5 14.0 5.6 8.3 10.9 11.7 4.0 4.6 4.3 5.2 3.3 2.4 0.9 1.8 3.6 2.3 2.4 2.5 3.5 2.2 3.9 4.4 3.6 3.4 28.5 26.6 22.7 24.8 22.5 18.9 20.3 17.4 17.4 21.5 25.7 27.4 25.6 28.5 29.3 29.8 24.1 20.6 11.7 9.8 11.1 13.5 9.8 8.5 11.8 8.7 8.4 13.8 17.1 17.4 11.4 8.1 10.0 16.3 12.7 12.4 16.8 16.8 11.5 11.3 12.7 10.4 8.6 8.7 9.0 7.7 8.6 10.0 14.2 20.4 19.3 13.5 11.3 8.2 13.4 13.6 13.2 15.0 15.5 17.2 6.0 6.1 6.7 7.9 6.2 6.9 7.4 7.4 6.6 7.1 9.3 10.4 12.1 12.7 12.0 12.6 14.5 16 3 16.7 14.9 15.5 5.9 4.0 3.6 5.0 5.8 6.6 7.7 6.4 7.6 6.2 8.7 8.4 7.6 8.7 9.7 9.0 8.5 8.0 21.8 22.8 23.6 24.3 23.0 19.9 18.9 18.0 20.0 23.2 24.3 26.9 22.9 19.6 19.6 20.4 20.7 20.5 14.1 12.5 17.0 16.6 16.0 13.8 13.7 12.9 14.4 16.8 17.9 21.1 17.6 14.4 13.9 15.5 15.8 16.8 7.7 10.3 6.6 7.7 7.0 6.1 5.2 5.1 5.6 6.4 6.4 5.8 5.3 5.2 5.7 4.9 4.9 3.7 21.3 18.2 16.2 13.0 13.8 15.3 0.8 0.5 0.3 2.9 5.4 6.8 20.5 17.7 15.9 10.0 8.4 8.5 9.4 11.0 9.8 9.9 12.7 9.2 11.3 12.7 8.0 9.5 8.8 9.5 12.4 5.3 5.9 6.0 1.4 1.5 1.0 0.3 0.3 3.9 5.4 6.7 17.8 17.8 16.6 18.6 14.2 12.0 12.4 16.8 17.1 19.4 20.3 23.0 23.1 19.9 22.4 24.9 23.3 23.9 11.4 12.6 11.2 13.4 9.5 7.4 6.4 14.1 13.6 13.1 14.4 18.2 18.4 15.0 16.7 18.9 18.0 19.9 6.4 5.2 5.4 5.2 4.7 4.7 6.0 2.8 3.5 6.4 5.9 4.8 4.8 4.9 5.8 6.0 5.3 3.9 20.2 19.8 23.2 24.1 25.6 28.4 30.6 31.7 31.8 26.1 24.4 25.9 30.3 37.7 36.4 34.2 3.7 6.0 7.3 8.1 9.0 9.6 10.2 11.2 71.6 9.5 8.3 8.7 9.7 14.9 15.9 15.6 16.5 13.7 16.0 16.0 16.5 18.7 20.4 20.5 20.2 16.6 16.1 17.2 20.6 22.9 20.6 18.6

1996 18.1 16.1 2.0 29.1 27.1 2.0 20.0 13.6 6.4 14.2 9.1 5.2 18.8 11.1 7.7 16.6 9.1 7.5 16.2 6.1 10.1 19.1 15.3 3.9 13.6 5.3 8.4 13.5 7.6 5.9 24.9 19.7 5.2 33.8 16.1 17.7

1997 19.4 17.3 2.0 37.0 33.6 3.3 20.7 13.7 7.0 16.7 10.4 6.3 23.3 12.7 10.6 18.5 11.0 7.5 19.0 13.1 5.9 19.5 15.7 3.8 10.8 5.5 5.3 13.0 8.2 4.8 25.5 20.6 4.9 33.5 15.9 17.6

1998 19.9 17.9 2.0 40.0 37.7 2.3 21.6 15.3 6.4 18.5 12.6 5.9 22.6 10.3 12.3 17.0 10.5 6.5 22.8 18.3 4.5 19.9 16.5 3.4 13.2 7.0 6.2 12.9 7.3 5.7 25.2 19.0 6.3 36.3 16.6 19.6

1999 17.9 16.1 1.8 32.5 28.2 4.3 22.2 15.5 6.7 19.4 13.1 6.3 23.8 12.5 11.3 17.6 10.6 7.0 19.4 12.0 7.5 18.9 16.3 2.6 15.9 8.0 7.9 15.8 9.6 6.2 21.3 14.5 6.8 36.4 17.0 19.5

2001 16.: 15,s 1.1 27.1 23.1 4. 22.c 15.' 6. 19. 12.! 6.1

18.1 11.: 7.: 17.' 11.1 6.#

22.; 16.# 6.,

Countryh'ear Colombia

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I Cote d'lvoire

Dominica

Dominican Rep.

Ecuador

Egypt

El Salvador

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Grenada

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GDFllGDP PrivatellGDP Public IlGDP GDFVGDP Private IlGDP IPublic IlGDP IGDFllGDP IPrivatellGDP IPublic IlGDP ~DFVGDP Private IlGDP Public IlGDP GDFllGDP Private IlGDP IPublic IlGDP bDFllGDP rivateI/GDP PublicllGDP GDFllGDP PrivatellGDP PublicllGDP GDFllGDP Private IlGDP (Public IlGDP IGDFllGDP IPrivateVGDP IPublicllGDP ~DFVGDP Private IlGDP Public IVGDP GDFllGDP Orivate IlGDP bublic IlGDP kDFllGDP PrivatellGDP Public IlGDP

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I I

I I

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 18.0 17.5 16.1 15.8 16.4 15.3 15.9 14.5 15.4 15.4 16.8 17.7 17.0 19.7 17.7 16.7 17.7 16.5 18.2 16.6 16.6 15.0 12.4 11.6 9.8 10.1 11.5 9.9 10.3 7.9 9.9 10.0 9.8 10.3 9.4 9.7 8.5 8.4 11.6 10.2 11.4 9.6 10.2 8.4 5.6 6.0 6.3 5.7 4.9 5.4 5.6 6.6 5.5 5.4 7.0 7.4 7.6 10.0 9.2 8.3 6.1 6.3 6.8 7.0 6.4 6.5 11.9 18.9 6.7 14.3 5.2 4.6 19.4 22.1 21.9 20.5 21.3 20.7 23.5 22.4 23.0 26.2 23.9 24.1 20.3 18.0 20.0 19.3 18.7 19.8 18.9 20.5 22.4 19.7 15.0 16.4 15.1 14.7 15.8 14.4 15.1 14.2 15.6 17.3 14.7 15.2 13.1 11.6 13.7 12.3 12.9 15.4 14.8 16.0 17.7 15.5 4.4 5.7 6.8 5.8 5.5 6.3 8.4 8.2 7.4 8.9 9.2 8.9 7.2 6.4 6.4 7.0 5.8 4.4 4.1 4.5 4.7 4.2 14.8 14.1 13.8 12.2 8.5 8.6 7.9 6.7 6.8 5.9 4.9 5.1 6.9 7.4 7.0 6.3 3.6 3.4 36.8 28.5 22.3 23.3 31.1 39.6 39.7 30.5 18.6 18.6 7.8 10.2 13.2 24.0 20.8 16.2 18.2 9.9 14.5 13.1 17.9 15.6 18.9 14.4 19.1 17.9 19.8 22.2 23.3 24.5 22.3 21.7 21.0 23.9 23.9 22.8 18.7 20.3 21.0 17.3 19.3 23.7 24.3 28.2 24.9 21.6 14.0 12.4 12.2 15.1 15.9 16.5 16.0 15.6 14.8 18.8 16.3 16.1 14.3 15.6 17.6 12.9 16.0 16.2 16.8 18.1 18.2 15.3 5.1 5.5 7.6 7.1 7.4 8.0 6.3 6.1 6.2 5.1 7.6 6.7 4.4 4.7 3.4 4.3 3.3 7.5 7.5 10.2 6.7 6.3 16.7 21.8 18.0 17.6 18.2 23.2 22.2 23.6 26.2 23.7 23.6 22.3 22.7 16.6 15.4 16.1 18.8 22.7 21.3 20.7 18.4 19.7 10.0 14.7 11.4 10.8 10.2 14.5 13.0 13.4 16.8 14.5 14.1 11.7 13.0 8.6 9.0 9.5 9.6 13.4 12.7 11.6 12.4 12.6 6.7 7.1 6.6 6.8 8.0 8.7 9.2 10.2 9.4 9.2 9.5 10.6 9.7 8.0 6.4 6.6 9.2 9.3 8.6 9.2 6.1 7.0 30.1 34.2 32.1 32.1 34.4 27.3 34.4 30.6 26.9 22.2 9.1 13.9 13.1 12.7 13.2 15.2 19.2 20.1 16.7 13.1 21.0 20.3 19.0 19.4 21.3 12.1 15.2 10.5 10.2 9.2 10.7 11.2 14.1 12.4 14.2 23.0 20.1 21.2 21.4 17.6 13.6 13.6 12.6 11.6 11.5 12.0 13.1 13.6 12.6 13.3 13.7 15.2 8.4 8.3 10.1 8.8 9.5 15.0 13.9 13.9 15.6 11.5 6.4 6.2 6.5 7.0 7.6 8.7 10.6 10.7 9.5 9.8 11.2 12.3 2.3 2.9 4.0 3.6 4.7 8.0 6.2 7.3 5.8 6.1 7.1 7.3 6.1 4.6 3.9 3.3 2.5 2.9 3.1 3.5 2.5 2.8

11.5 8.6 24.6 5.9 4.3 2.3 5.6 4.3 22.4 12.6 13.3 13.0 13.9 14.8 15.6 20.6 18.9 20.0 18.7 10.2 10.4 9.8 10.5 11.9 12.1 14.0 13.0 14.4 12.4 2.4 2.9 3.2 3.4 2.9 3.5 6.6 5.9 5.6 6.3

23.3 38.4 41.7 39.1 26.9 28.0 30.1 31.4 32.2 31.5 35.3 34.7 6.9 6.1 4.5 4.7 3.4 4.6 11.4 24.2 21.6 25.6 25.8 27.4 16.4 32.3 37.2 34.4 23.5 23.4 18.7 7.2 10.6 5.9 9.5 7.3 16.4 16.8 15.0 10.5 9.6 11.0 10.1 12.4 13.4 13.7 13.0 12.2 10.5 8.9 8.9 6.6 6.7 8.3 8.1 9.7 10.5 10.6 10.4 9.8 5.9 7.8 6.1 3.9 2.9 2.7 2.0 2.7 2.9 3.2 2.6 2.4

1992 15.1 8.3 6.7 20.1 9.2 10.9 20.8 16.6 4.1 8.5 4.7 3.8 28.4 20.2 8.1 22.5 15.4 7.1 19.5 12.4 7.1 19.1 10.5 8.5 17.2 13.2 4.0 26.9 25.5 1.3 27.7 24.0 3.7 15.6 13.2 2.4

1993 18.9 10.8 8.1 17.0 9.8 7.2 23.2 18.3 4.9 7.8 4.1 3.7 25.5 20.1 5.4 26.4 16.4 10.0 19.9 13.2 6.7 16.2 9.2 7.1 17.8 13.7 4.0 26.9 24.0 2.9 29.2 24.5 4.7 16.1 13.4 2.7

1994 23.3 16.7 6.6 19.8 9.5 10.4 19.5 14.6 4.8 11.1 7.0 4.1 25.5 16.8 8.8 21.1 12.6 8.5 18.8 12.8 6.0 16.6 10.5 6.1 18.6 14.7 3.8 27.6 23.5 4.2 33.9 24.1 9.8 14.2 11.7 2.6

1995 22.4 14.5 7.9 16.1 9.2 6.9 18.9 13.8 5.1 13.6 9.5 4.2 30.8 19.0 11.8 19.2 11.0 8.1 18.6 13.1 5.5 16.2 10.7 5.5 18.6 15.0 3.6 26.7 21.9 4.8 30.5 23.3 7.1 14.5 12.0 2.5

1996 21.5 13.0 8.5 13.5 7.3 6.2 17.1 12.2 4.8 15.6 11.4 4.2 28.1 16.7 11.4 18.7 10.2 8.5 17.8 11.2 6.6 16.0 10.5 5.5 15.8 12.1 3.7 27.8 22.6 5.2 33.7 24.3 9.5 13.3 10.8 2.5

1997 20.2 11.0 9.2 15.5 8.9 6.6 19.2 14.0 5.1 15.5 10.2 5.3 28.5 17.9 10.5 19.5 12.7 6.8 19.0 12.8 6.3 17.6 12.1 5.6 16.1 12.7 3.3 31.7 27.0 4.7 35.0 25.8 9.2 15.1 12.1 3.1

1998 17.6 9.9 7.7 16.6 8.1 8.5 23.7 18.2 5.5 16.0 9.9 6.1 28.5 19.3 9.2 23.1 16.6 6.5 21.0 15.2 5.7 19.5 12.3 7.2 16.6 13.2 3.3 29.7 25.1 4.6 35.9 27.2 8.7 16.6 13.7 3.0

1999 2000 14.1 14.3 5.5 6.9 8.6 7.4 14.6 15. 7.4 7.4 7.2 7.6

I 16.3 12.1 4.2 27.7 18.7 9.0 24.8 18.9 5.9 14.0 6.9 7.1 20.0 13.0 7.0 16.2 13.0 3.1 25.7 21.4 4.2 39.6 28.8 10.8 17.9 14.8 3.1

17. 12.9 4.7 29.1 21.6 7.5 23.2 17. 5.8 15.9 15.4 0.5 21.5 14.0 7.5 16.2 13.01 3.2 26.9 23.1 3.8 39.6 28.8 10.8 16. 14. 2.8

TABLEc1. INVESTMENT AS A SHARE OF GDP (IN %) (Continued) omtrywear Guinea-Bissau

1 IGDFllGDP Private IlGDP

Private IlGDP

Private IlGDP

Indonesia

Iran

Kazakhstan

Kenya

Korea, Rep. of

Lithuania

Madagascar

I

Private IlGDP Public VGDP GDFllGDP Private IlGDP Public IlGDP GDFVGDP Private IlGDP Public IlGDP GDFllGDP Private IlGDP Public IlGDP GDFllGDP Private IlGDP Public IlGDP GDFllGDP Private IlGDP Public IlGDP GDFllGDP Private IlGDP Public IlGDP GDFllGD P Private IlGDP

Private IlGDP IPublic IlGDP

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 35.2 7.3 27.9 27.8 13.6 14.2 16.3 15.9 16.7 14.5 14.3 10.4 11.2 8.5 6.4 8.1 5.9 4.7 8.1 8.0 6.2 14.0 14.7 15.3 14.0 14.4 16.2 17.3 17.2 17.4 17.9 18.5 18.9 19.2 18.8 19.6 20.6 21.1 21.4 8.5 8.7 8.3 7.7 8.6 9.2 9.2 9.3 9.5 9.3 10.1 10.1 9.1 9.3 9.9 10.5 10.2 11.5 5.5 6.0 7.0 6.3 5.8 7.0 8.1 7.8 7.9 8.5 8.4 8.9 10.1 9.5 9.7 10.1 10.9 10.0 24.2 30.5 25.1 22.5 23.6 24.2 24.9 13.7 18.2 13.2 12.5 13.5 16.2 17.3 10.5 12.3 11.9 9.9 10.1 8.0 7.5 21.7 19.1 17.5 21.5 20.9 17.5 15.4 13.3 11.4 9.3 7.4 12.0 12.4 10.6 8.6 7.8 10.4 9.8 10.0 9.4 8.5 6.9 6.7 5.5

1988 44.7 14.1 30.6 18.0 8.2 9.8 13.4 6.7 6.7 21.6 12.0 9.6 26.1 17.7 8.4 13.3 7.9 5.4

1989 39.0 8.7 30.3 18.9 10.7 8.2 14.3 6.5 7.8 22.4 13.2 9.2 27.3 18.7 8.6 13.3 8.2 5.1

1990 29.9 8.4 21.5 27.7 14.4 13.3 12.2 7.0 5.1 22.9 13.9 9.0 28.0 19.5 8.5 15.8 8.5 7.3

1991 31.0 7.8 23.2 42.2 27.2 15.1 10.3 6.2 4.2 22.0 12.9 9.2 27.2 18.4 8.8 22.3 13.6 8.7

1995 22.3 7.1 15.2 31.7 15.5 16.3 8.7 2.7 6.0 24.4 16.7 7.7 28.4 20.8 7.7 23.0 12.6 10.4

1996 23.0 8.3 14.8 30.0 10.9 19.1 9.5 4.0 5.5 22.8 15.9 6.9 29.6 22.9 6.7 25.7 14.2 11.5

19.7 22.7 22.1 13.7 14.0 13.6 6.0 8.7 8.5 21.5 19.9 15.6 14.6 5.9 5.3

20.1 12.0 8.0 29.6 25.3 4.3

19.3 11.6 7.8 31.9 27.7 4.2

20.7 11.3 9.4 37.1 32.2 4.9

19.3 17.0 19.6 18.9 21.4 11.0 9.8 11.5 10.4 13.9 8.3 7.1 8.0 8.5 7.4 38.4 36.6 36.2 36.0 36.7 33.1 30.7 30.9 31.0 31.5 5.4 5.9 5.3 5.0 5.2 23.0 11.8 11.2 10.6 11.3 11.4 10.9 10.9 4.6 3.7 3.7 4.7 4.9 5.9 7.6 7.8 6.2 6.0 17.0 17.2 13.0 26.8 14.5 8.7 6.9 4.6 11.6 5.1 8.3 10.2 8.4 15.1 9.4

19.8 12.7 7.0 36.8 31.1 5.7 23.0 12.3 10.7 11.6 5.0 6.7 9.1 3.0 6.1

20.8 11.4 9.4 23.2 19.1 4.2

19.2 10.5 8.7 25.1 20.8 4.2

20.2 11.7 8.5 25.2 20.1 5.1

20.0 11.6 8.4 23.9 19.2 4.7

21.0 12.1 8.9 26.7 21.8 4.9

25.1 15.6 9.5 30.7 25.4 5.3

23.7 12.8 10.9 32.7 26.9 5.8

23.6 13.3 10.3 32.1 25.5 6.7

23.9 13.6 10.2 28.0 21.4 6.5

19.0 10.7 8.4 28.4 23.0 5.3

18.0 11.4 6.7 29.2 24.0 5.2

18.1 10.9 7.2 28.9 23.8 5.1

17.9 10.9 7.0 28.6 23.3 5.2

19.6 11.6 8.0 28.2 23.8 4.4

19.6 12.6 7.1 29.1 24.8 4.2

8.5 9.0 10.1 13.3 13.4 14.8 2.6 3.6 3.1 6.4 3.7 6.9 6.0 5.4 7.0 6.9 9.7 7.9 20.4 18.9 24.9 22.1 22.2 30.9 26.8 22.2 15.1 14.6 13.7 13.0 13.3 12.0 13.8 15.3 16.7 16.7 7.8 7.3 7.8 8.5 9.4 12.3 7.5 4.7 4.9 6.1 5.4 3.3 5.0 2.8 5.9 7.2 9.0 8.6 12.6 11.6 17.1 13.6 12.8 18.6 19.3 17.5 10.2 8.4 8.3 9.8 8.3 9.2 7.9 8.2 7.6 8.0

1992 48.4 20.0 28.4 42.3 26.2 16.1 3.2 2.9 0.3 22.4 14.2 8.2 25.6 16.9 8.7 22.7 13.4 9.3

1993 30.9 6.3 24.6 41.5 22.1 19.4 4.8 3.9 0.9 21.4 13.4 8.0 26.3 17.0 9.3 22.1 11.4 10.7

1994 21.8 1.4 20.4 27.2 15.6 11.6 3.4 3.0 0.4 21.9 13.2 8.8 27.6 19.2 8.4 23.1 12.8 10.3

1997 21.6 6.1 15.6 30.3 12.3 18.1 10.2 4.5 5.7 21.7 15.4 6.4 28.3 22.5 5.8 24.9 14.2 10.7 16.3 13.6 2.7 17.6 11.2 6.4 35.1 29.0 6.1 24.4 13.3 11.1 11.9 6.3 5.6 9.8 2.7 7.1

1998 11.3 5.2 6.2 28.8 14.3 14.5 8.2 4.7 3.5 21.2 15.0 6.3 24.6 17.4 7.1 22.1 13.4 8.7 17.3 14.8 2.5 16.5 10.8 5.6 29.8 23.2 6.5 24.3 15.6 8.7 12.5 6.9 5.6 11.0 2.3 8.6

1999 2000 16.3 19.2 5.2 5.3 11.1 13.9 24.5 28.7 12.6 12.5 11.8 16.2 11.0 5.7 5.3 21.2 14.9 6.4 21.2 12.9 8.3 22.2 27.6 13.0 19.C 9.2 8.6 15.9 14.0 1.9 15.1 10.1 5.0 28.0 22.0 6.0 22.5 14.3 8.2 12.9 16.1 6.8 8.2 6.1 7.9 12.8 13.9 2.2 4.1 10.6 9.8 Continued

CountryPlear Malaysia

Mauritania

I

auritius

Mexico

Morocco

Namibia

Nicaragua

Pakistan

I

'anama

GDFllGDP Private UGDP PublicllGDP GDFllGDP Private IlGDP IPublic IlGDP ~DFVGDP /PrivateIVGDP IPublic IlGDP IGDFllGDP PrivateVGDP PublicllGDP GDFllGDP Private IlGDP IPublic VGDP ~DFIIGDP Private IlGDP Public IlGDP GDFllGDP Private IlGDP \Public IlGDP IGDFllGDP IPrivate IlGDP IPublicllGDP

1970 1971 1972 1973 1974 1975 1976 1977 18.9 22.1 23.9 23.7 26.9 26.6 23.4 24.3 12.8 15.5 15.2 16.5 19.3 16.6 14.0 14.2 6.1 6.6 8.7 7.2 7.6 10.0 9.4 10.1

I 1 I

I I

I I

I I 14.3 I 7.3

I

~GDFVGDP I

Private IlGDP Public IlGDP 'apua N. Guinea GDFllGDP Private IlGDP Public IlGDP 'araguay GDFllGDP PrivatellGDP IPublicllGDP Peru ~GDFVGDP Private IlGDP Public IlGDP

19.8 17.8 18.9 19.2 19.9 21.4 13.2 13.2 12.8 11.7 12.3 12.4 6.6 4.6 6.1 7.5 7.6 9.0 24.8 9.8 15.0

I I

28.4 20.3 8.1 21.0 12.8 8.2 29.7 12.9 16.7

27.7 18.9 8.8 19.7 11.9 7.8 32.0 14.5 17.5

1978 1979 1980 1981 1982 24.7 26.4 31.1 36.0 36.3 15.7 17.5 19.5 19.9 18.2 9.0 8.9 11.6 16.1 18.2

1983 36.0 17.7 18.4

1984 31.9 16.8 15.1

28.3 18.3 10.0 21.2 12.8 8.4 24.9 13.5 11.4

18.0 11.6 6.4 17.5 11.0 6.6 24.4 11.8 12.6 18.3 6.4 11.9

17.8 11.8 6.1 18.0 11.4 6.6 23.1 11.2 11.9 15.2 6.2 9.0

25.7 17.7 8.0 23.7 13.5 10.2 24.0 11.4 12.6

23.3 14.9 8.4 24.8 13.9 10.9 22.2 11.8 10.4 27.2 11.4 15.7

21.9 13.5 8.5 26.3 14.3 12.1 26.0 11.4 14.5 27.5 10.2 17.2

17.9 11.5 6.4 23.0 12.8 10.2 27.3 13.4 13.9 23.0 7.2 15.8

1985 29.8 15.8 14.0 24.5 16.1 8.4 18.7 12.6 6.0 19.2 12.5 6.7 23.1 12.1 11.0 14.1 5.0 9.1

14.0 12.6 11.5 12.2 14.4 18.2 18.6 17.3 17.0 17.1 17.1 16.8 17.0 16.5 16.5 7.0 6.6 5.6 4.4 4.6 5.9 6.2 5.8 5.8 7.7 7.8 7.2 7.4 7.5 7.6 7.0 7.0 6.0 5.9 7.8 9.8 12.3 12.4 11.5 11.2 9.4 9.4 9.7 9.6 9.0 8.9 15.4 11.8 3.7 26.8 33.0 29.7 23.9 18.4 18.1 26.1 23.6 17.6 12.1 8.7 6.9 6.1 6.2 6.3 14.8 14.0 15.5 15.6 17.9 19.9 22.7 23.8 25.2 27.0 30.2 30.2 24.0 20.1 21.6 20.7 10.8 10.3 11.0 12.3 15.2 15.7 13.5 15.2 17.9 20.7 25.7 25.7 22.7 13.3 13.2 14.2 4.0 3.7 4.5 3.3 2.7 4.2 9.2 8.6 7.3 6.3 4.5 4.5 1.3 6.9 8.4 6.5 28.8 29.5 23.7 20.2 18.2 21.5 20.8 15.1 12.1 12.0 7.3 8.7 8.7 8.1 6.1

1986 26.3 14.3 12.1 26.4 19.9 6.5 19.7 12.8 7.0 19.6 13.0 6.6 21.3 12.2 9.1 13.8 5.9 7.8

17.0 7.8 9.2 17.0 13.4 3.7 21.0 14.5 6.4 23.5 18.5 5.1 18.5 13.2 5.4

1987 23.0 13.8 9.1 25.3 17.8 7.5 21.6 14.3 7.3 18.5 13.3 5.2 20.2 11.6 8.6 14.5 6.7 7.8

17.5 7.7 9.7 19.3 16.8 2.4 19.3 14.0 5.3 23.7 17.6 6.1 17.8 13.4 4.4

1988 24.1 15.4 8.7 25.1 19.0 6.1 28.7 16.6 12.2 18.5 14.1 4.4 19.3 11.8 7.6 15.3 8.2 7.1

16.5 7.7 8.8 8.8 5.7 3.1 23.3 18.3 5.0 23.1 16.3 6.9 19.7 15.5 4.2

1989 29.3 18.5 10.8 16.8 11.8 5.1 26.5 19.5 7.1 17.2 13.0 4.2 22.8 13.2 9.6 16.7 10.8 5.9

17.3 8.3 9.0 6.5 4.5 2.0 26.0 21.2 4.7 22.7 16.0 6.7 16.6 13.1 3.5

1990 32.4 20.9 11.5 17.9 12.4 5.6 30.6 19.2 11.4 17.9 13.6 4.3 25.0 16.4 8.6 21.3 13.1 8.2 20.4 11.2 9.3 17.3 8.9 8.4 8.5 7.4 1.1 25.1 20.0 5.1 22.0 19.2 2.8 16.1 12.9 3.2

1991 34.9 23.7 11.1 17.9 9.1 8.8 28.6 20.4 8.2 18.7 14.6 4.1 22.2 12.7 9.6 16.2 8.6 7.6 18.3 10.7 7.6 17.4 8.9 8.5 15.0 12.0 3.0 28.0 23.3 4.7 23.7 20.4 3.3 16.6 13.1 3.5

1992 36.0 21.5 14.5 19.3 11.2 8.1 27.8 18.3 9.6 19.6 15.8 3.8 22.4 12.8 9.5 21.0 10.9 10.1 19.5 9.7 9.8 18.6 9.8 8.8 18.5 15.1 3.4 23.8 18.6 5.2 21.9 18.2 3.7 16.5 12.4 4.1

1993 38.3 23.8 14.6 22.0 8.7 13.3 28.5 20.6 7.9 18.6 14.8 3.8 22.8 11.0 11.8 21.1 13.8 7.3 18.9 8.9 10.0 19.1 10.0 9.1 23.2 19.2 4.0 18.8 12.5 6.3 22.0 18.8 3.2 18.3 13.7 4.7

1994 40.1 27.2 13.0 14.5 3.1 11.4 30.8 21.7 9.1 19.4 14.3 5.0 20.7 10.6 10.1 19.5 12.5 7.0 22.0 9.6 12.4 17.9 9.6 8.3 23.6 20.8 2.9 14.5 11.6 2.8 22.5 19.0 3.5 21.2 16.4 4.8

1995 44.3 31.7 12.6 19.3 8.1 11.2 24.2 16.3 8.0 16.2 12.4 3.7 21.4 12.5 8.9 22.2 15.1 7.1 24.0 10.6 13.4 16.9 8.7 8.2 26.0 21.8 4.3 19.4 15.7 3.6 23.1 17.7 5.3 24.3 19.5 4.7

1996 42.5 31.3 11.2 18.6 3.6 15.0 26.1 16.7 9.3 17.9 14.9 3.0 19.4 12.6 6.8 23.5 16.2 7.3 29.2 11.6 17.6 17.4 9.1 8.3 25.3 21.2 4.0 27.9 24.2 3.7 22.6 18.2 4.4 22.6 18.3 4.3

1997 43.1 31.8 11.3 17.7 5.2 12.4 27.3 20.8 6.5 19.5 16.4 3.1 20.7 13.6 7.1 20.1 11.9 8.2 31.9 18.2 13.7 16.4 10.3 6.1 26.5 22.3 4.2 27.1 21.6 5.4 22.7 15.2 7.5 24.0 19.6 4.4

1998 26.8 15.6 11.2 20.0 7.3 12.7 24.4 18.3 6.1 20.9 18.3 2.6 22.4 15.7 6.6 23.5 15.7 7.8 32.4 19.8 12.6 15.1 9.5 5.6 28.1 23.2 4.8 30.3 23.3 6.9 22.1 14.4 7.7 23.8 19.4 4.5

1999 22.3 11.3 11.0

2000 21.9 10.8 11.1

27.7 21.8 5.9 21.0 18.9 2.1 24.3 17.3 7.0 23.2 12.9 10.4 42.7 22.0 20.7 13.3 8.3 5.0 29.6 26.3 3.3

24. 18.61 6.0 20.8 18.6 2.2 24.8 16.0 8.8

36.8 19.0 17.8 13.3 8.d 4. 29. 26.4 3.5

22.1 14.2 7.9 21.6 16.8 4.8

22.1 14.2 7. 21. 17. 4.

Countryflear Philippines

Poland

Romania

Seychelles

South Africa

t. Lucia

GDFllGDP Private IlGDP Public IlGDP GDFllGDP Private IlGDP IPublic IlGDP

I

PDFVGDP I

Drivate IlGDP "ublic IlGDP GDFllGDP Private IlGDP Public IlGDP GDFllGDP PrivateVGDP JPublicllGDP

1

PDFVGDP I

Private IlGDP Public IlGDP St. Vincent GDFllGDP Private VGDP IPublic IlGDP hailand bDFllGDP IPrivate IlGDP IPublicllGDP rinidad & Tobago bDFI/GDP Private IlGDP Public IlGDP Tunisia GDFllGDP PrivateVGDP PublicVGDP Turkey GDFllGDP PrivatellGDP IPublicllGDP Uruguay bDFllGDP ~. rivatel/GDP PublicllGDP

I

1970 1971 1972 1973 1974 1975 24.7 20.6 4.1

24.7 26.2 26.9 25.4 25.1 29.4 14.1 14.5 14.0 13.5 13.4 14.8 10.6 11.7 12.8 11.9 11.7 14.6

I I 23.8 I 16.7 I 7.1 1

I I

20.4 8.5 11.9 22.5 12.6 9.9 11.8 8.8 3.0

23.3 22.7 22.4 23.3 22.9 16.6 16.0 17.3 19.6 17.7 6.7 6.7 5.1 3.7 5.2

19.8 7.7 12.1 20.2 11.6 8.6 11.5 8.3 3.2

19.8 8.8 11.0 21.7 13.0 8.7 9.8 7.5 2.3

20.5 10.7 9.8 21.4 12.9 8.5 9.0 7.1 1.9

20.8 10.5 10.3 19.9 11.3 8.6 10.3 7.7 2.6

25.7 12.3 13.4 22.1 11.7 10.4 13.3 8.7 4.6

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 26.4 25.1 25.2 27.5 27.2 27.8 27.5 29.8 24.5 17.5 16.8 16.5 17.8 20.8 23.1 20.0 16.1 17.9 18.2 20.1 18.8 16.8 20.0 23.7 19.1 13.7 14.0 13.7 14.9 17.3 18.9 15.9 10.3 7.2 7.0 7.4 8.5 10.9 7.5 6.1 5.4 3.7 2.8 2.8 2.9 3.6 4.2 4.1 16.0 20.7 20.9 2.7 8.5 12.3 13.3 12.1 8.5 14.2 1.4 12.9 23.0 21.3 14.8 8.4 8.2 12.9 30.1 28.0 26.4 26.2 26.2 27.8 27.9 26.8 24.4 23.3 20.2 18.5 19.8 20.6 19.6 17.2 14.7 13.7 13.0 12.7 13.3 15.5 15.9 15.6 14.6 13.1 11.6 11.2 13.2 13.2 12.9 11.0 15.5 14.3 13.4 13.5 12.9 12.3 12.0 11.2 9.9 10.2 8.6 7.3 6.7 7.4 6.8 6.1 34.3 34.2 33.5 21.7 19.6 24.1 24.6 24.5 29.9 34.6 25.8 25.3 25.1 26.1 24.7 13.0 12.3 15.7 14.6 14.1 16.8 20.7 13.8 12.0 9.2 8.1 8.8 8.7 7.3 8.4 10.0 10.4 13.1 13.9 12.0 13.3 26.2 29.7 29.4 14.6 18.1 17.5 11.6 11.6 12.0 22.9 26.0 25.3 25.6 27.8 28.0 26.9 28.5 28.6 27.2 25.8 27.6 30.7 34.6 40.4 41.6 16.1 18.6 17.6 18.0 18.9 19.0 19.1 20.5 20.3 18.5 18.4 21.7 25.6 29.6 34.2 34.4 6.8 7.4 7.7 7.6 8.8 8.9 7.9 8.0 8.3 8.7 7.4 6.0 5.0 5.0 6.1 7.2 26.1 18.8 21.6 19.3 13.1 16.6 12.6 16.6 19.6 13.6 19.4 17.0 11.4 14.7 10.7 10.7 6.4 5.2 2.2 2.4 1.7 1.9 1.9 6.0 29.0 30.7 30.9 30.5 28.3 31.0 34.0 31.8 32.1 28.1 25.0 21.6 20.5 22.5 30.7 30.1 11.6 10.9 11.7 12.0 13.3 14.8 15.4 15.9 15.7 13.3 12.1 11.3 11.5 12.5 19.7 19.9 17.4 19.8 19.2 18.5 15.0 16.2 18.6 16.0 16.4 14.8 12.8 10.4 9.0 10.0 11.0 10.2 24.4 25.7 23.1 21.9 22.1 20.1 19.4 20.1 19.5 20.3 22.8 24.7 26.1 22.8 22.9 23.7 13.2 13.2 12.4 10.7 13.3 11.0 11.1 11.4 11.4 11.1 12.6 14.7 17.2 15.2 15.8 16.1 11.2 12.5 10.7 11.2 8.8 9.2 8.3 8.7 8.1 9.2 10.2 10.0 8.9 7.6 7.0 7.6 15.5 15.2 16.0 16.2 16.7 16.1 15.2 13.7 10.9 9.6 9.9 11.4 12.5 13.0 12.1 13.4 9.0 8.2 8.0 9.7 11.9 10.9 8.0 8.6 6.4 6.1 6.2 7.4 7.6 8.4 8.3 9.3 6.5 7.0 8.0 6.5 4.9 5.2 7.3 5.1 4.5 3.5 3.7 4.0 4.9 4.5 3.9 4.2

1992 20.9 16.0 4.9 17.5 7.7 9.8 14.7 2.3 12.4 21.0 11.5 9.4 15.7 10.4 5.2 24.1 10.6 13.5 24.3 11.3 13.0 39.3 31.1 8.1 14.1 8.6 5.5 32.3 20.3 12.0 23.0 15.6 7.4 14.2 9.9 4.3

1993 23.8 18.8 5.0 15.9 6.4 9.4 14.1 3.7 10.4 26.8 15.6 11.2 14.7 10.3 4.4 24.8 11.6 13.2 25.6 15.7 9.9 39.5 31.6 7.9 14.3 9.6 4.8 28.1 12.8 15.3 25.5 18.3 7.3 14.8 10.3 4.4

1994 24.3 19.4 4.9 15.1 6.7 8.5 16.1 5.9 10.2 24.7 17.1 7.5 15.2 11.0 4.1 23.9 12.3 11.6 28.2 16.0 12.2 39.9 31.2 8.7 20.2 15.2 5.0 27.0 13.3 13.7 24.5 19.4 5.0 14.5 10.1 4.4

1995 22.0 17.7 4.3 15.4 6.8 8.6 18.0 7.1 10.9 30.3 23.6 6.8 15.9 11.6 4.3 18.7 10.4 8.3 30.2 24.2 6.0 40.9 32.0 8.9 20.8 17.3 3.5 24.2 11.9 12.3 24.2 20.0 4.2 13.5 9.9 3.7

1996 23.6 19.2 4.4 17.0 7.8 9.2 19.2 7.6 11.6 49.1 41.0 8.1 16.1 11.7 4.4 21.4 14.6 6.8 28.3 21.4 6.9 41.0 30.8 10.2 24.3 19.9 4.4 23.2 11.9 11.3 25.4 20.2 5.2 14.0 10.5 3.5

1997 25.1 20.1 5.0 19.3 10.3 9.0 17.4 6.2 11.3 30.7 21.9 8.9 16.3 11.8 4.5 24.6 18.2 6.4 29.7 17.5 12.2 33.8 22.2 11.6 36.1 30.1 5.9 24.7 12.7 11.9 26.8 20.6 6.2 14.3 10.6 3.6

1998 20.2 15.3 4.9 20.4 11.8 8.6 16.4 6.6 9.8 38.0 24.6 13.4 16.5 11.1 5.4 23.9 15.5 8.4 31.8 18.1 13.8 29.0 19.4 9.6 28.0 22.3 5.7 24.7 13.2 11.6 24.9 18.8 6.1 14.9

1999 18.6 12.9 5.7 20.5 12.7 7.8 13.5 6.9 6.6 37.1 24.8 12.3 14.9 10.3 4.6 26.4 16.9 9.5 32.6 18.8 13.8 28.7 19.4 9.3 21.0 14.2 6.7 25.2 13.1 12.0 22.3 16.1 6.2 14.6 10.9 10.6 4.0 4.0

2000 17.6 12.2 5.4 20.1 12.8 7.

29.3 17.3 12.0

24.6 15.8 8.8

26.6 18.51 8.1 21.8 16.3 5.5

23.8 17.0 6.8 15.7 12.1 3.6

TABLEc1. INVESTMENT AS A SHARE OF GDP (IN %) (Continued) ~~~

CountryiYear Uzbekistan

GDFllGDP Private IlGDP Public VGDP Venezuela, R. B. GDFllGDP Private IlGDP Public IlGDP Yugoslavia, F.R. GDFllGDP Private IlGDP Public l/GDP

East Asia

DFVGDP

South Asia

GDFllGDP Private//GDP PublicMGDP bDFllGDP PrivafeVGDP PublicVGDP GDFllGDP PrivateIIGDP PublicI/GDP GDFllGDP PrivafeVGDP PublicIIGDP GDFllGDP PrivafeMGDP Public//GDP

LAC

SSAFR

ECA

MENA

1970 1971 1972 1973 1974 1975 1976 19771978 1979 1 ~ 9 6 1982 1 19831984 1985 1 9 8 6 9 8 7 1988 1989 1990 1991 1992 1993 199419951996 26.2 33.0 36.8 8.3 14.8 10.0 17.9 18.2 26.7 16.0 17.3 20.4 21.2 22.8 16.9 14.1 18.2 21.1 20.0 17.6 16.5 15.8 10.5 11.1 10.9 12.1 12.3 7.2 4.9 7.6 8.9 9.0 8.2 7.1 7.0 5.5 6.2 9.5 9.1 10.5 9.7 9.2 10.6 12.2 11.0 9.4 9.4 8.8

21.3 14.8 6.6 14.1 , 7.9 16.2 I 16.6 11.5 5.1 22.2 13.9 8.3 22.5 12.6 9.9 20.4 8.5 11.9

22.3 15.9 6.4 14.3 7.8 6.5 16.9 11.6 5.3 24.4 14.2 10.2 20.2 11.6 8.6 19.8 7.7 12.1

22.2 15.3 6.9 13.9 7.4 6.5 17.4 11.5 6.0 24.5 13.8 10.7 21.7 13.0 8.7 19.8 8.8 11.0

23.1 17.6 5.5 9.5 5.4 4.1 16.7 11.1 5.6 22.2 10.9 11.3 21.4 12.9 8.5 20.5 10.7 9.8

25.1 24.8 19.9 18.7 5.2 6.1 11.2 12.3 5.7 5.7 5.5 6.6 19.0 20.5 12.5 13.2 6.5 7.3 21.1 24.8 10.4 11.4 10.713.4 19.9 22.1 11.3 11.7 8.6 10.4 20.8 25.3 10.5 11.1 10.3 14.2

24.1 16.3 7.8 15.1 6.8 8.3 21.1 13.1 8.0 25.2 13.8 11.4 24.4 13.2 11.2 29.3 12.3 17.1

25.5 26.5 28.0 18.1 19.2 20.6 7.4 7.2 7.4 15.6 15.5 15.4 6.8 7.0 6.9 8.8 8.5 8.4 20.5 20.9 21.9 12.8 13.3 13.1 7.7 7.6 8.8 24.7 27.7 25.6 13.5 14.8 12.7 11.212.912.9 25.7 23.1 21.9 13.2 12.4 10.7 12.5 10.7 11.2 31.3 27.9 27.2 12.7 12.6 11.7 18.6 15.3 15.6

27.7 27.2 17.3 16.4 10.4 10.8 17.0 19.9 8.7 10.5 8.3 9.4 22.4 24.0 14.5 15.0 7.9 9.0 24.5 23.2 11.5 11.6 13.011.7 22.1 20.1 13.3 11.0 8.8 9.2 24.1 25.3 12.2 11.8 11.9 13.5

29.4 18.8 10.6 19.6 9.6 10.0 22.2 13.5 8.7 20.5 10.3 10.2 19.4 11.1 8.3 27.2 11.3 15.9

28.9 18.7 10.2 18.5 8.9 9.6 18.9 10.9 8.0 19.0 10.1 8.9 20.1 11.4 8.7 28.0 13.4 14.6

26.5 17.0 9.5 18.0 9.0 9.1 18.8 11.6 7.2 17.7 9.3 8.4 19.5 11.4 8.1 27.1 13.1 14.0

24.8 15.2 9.5 18.7 10.3 8.5 17.9 11.4 6.5 17.2 9.3 7.8 20.3 11.1 9.2 25.2 12.2 13.0

24.7 15.9 8.8 18.9 9.8 9.1 18.5 12.1 6.5 17.0 9.5 7.4 22.8 12.6 10.2 24.0 11.5 12.5

24.6 16.7 7.9 19.3 10.2 9.1 19.7 13.4 6.3 19.2 9.5 9.7 24.7 14.7 10.0 20.6 11.5 9.1

24.1 17.1 7.0 18.8 10.4 8.4 19.6 12.8 6.8 21.8 11.5 10.3 26.1 17.2 8.9 21.9 12.6 9.3

25.9 19.0 6.9 19.6 11.1 8.5 20.5 13.7 6.7 20.1 10.5 9.7 19.4 8.9 10.4 22.3 13.5 8.8

27.5 20.3 7.2 19.1 10.9 8.2 20.0 13.3 6.7 19.0 10.4 8.6 21.6 8.4 13.2 24.6 15.3 9.3

28.2 20.9 7.4 18.8 10.7 8.1 20.4 13.4 7.0 18.3 9.6 8.7 19.2 7.6 11.7 24.2 14.8 9.4

28.1 19.6 8.5 19.5 11.5 8.0 20.0 13.1 6.9 20.0 10.3 9.8 19.7 10.3 9.4 24.1 14.3 9.8

28.7 19.3 9.4 19.5 11.7 7.9 21.1 14.3 6.7 19.0 9.7 9.2 19.1 11.1 8.0 22.3 11.1 11.2

28.8 20.2 8.6 19.4 11.5 7.9 20.6 14.1 6.5 19.1 9.7 9.4 20.6 11.5 9.0 21.8 11.8 10.1

29.8 21.4 8.4 20.1 12.6 7.6 20.8 14.4 6.4 19.0 10.9 8.1 21.4 12.5 8.9 21.2 11.9 9.3

31.1 22.9 8.2 20.1 12.9 7.2 20.7 13.9 6.8 20.2 12.2 8.0 24.0 14.1 9.9 21.1 12.3 8.8

~

1997 33.8 10.9 22.9 18.7 9.4 9.4

1998 30.4 12.3 18.0 19.0 10.7 8.4 11.2 9.8 1.4

1999 28.6 9.7 18.9 15.7 8.8 6.9 13.0 11.4 1.6

206 21.8 7.5 14.3 14.5 8.4 6.2 15.4 13.1 2.3

29.9 21.4 8.5 19.6 13.1 6.5 22.5 15.5 7.0 18.5 10.7 7.9 24.2 15.7 8.5 22.0 13.1 8.8

26.2 17.3 9.0 19.3 13.2 6.1 22.8 16.1 6.7 18.6 10.9 7.7 22.8 15.9 6.8 22.2 13.6 8.5

24.4 15.0 9.4 18.9 12.9 6.0 22.5 15.1 7.2 19.0 11.3 7.7 21.0 14.3 6.8 22.9 14.1 8.8

22.0 13.8 8.2 17.9 12.9 5.7 22. 15.9 6.4 19.3 10.6 8.7 22.6 16.2 6.4 24.7 16.4 8.3

TABLE c1. INVESTMENT AS A SHARE OF GDP (IN %) (Continued)

I

CountryNear Total GDFllGDP Total Privafe MGDP Total Public l/GDP

1970 17.9 11.6 6.3

1971 18.4 11.9 6.5

1972 18.7 11.8 6.9

1973 1974 1975 1976 17.6 19.2 21.1 22.2 11.2 12.2 12.8 12.9 6.4 7.0 8.4 9.3

1977 22.2 13.0 9.1

1978 1979 1980 1981 1982 22.6 23.0 23.2 24.2 23.6 13.6 13.3 13.7 14.1 13.5 9.0 9.7 9.5 10.1 10.1

1983 21.7 12.4 9.4

1984 20.8 12.2 8.6

1985 19.7 11.7 8.0

1986 19.8 12.0 7.8

1987 1988 1989 1990 1991 20.5 21.0 21.3 21.2 21.2 12.8 13.2 13.6 13.4 13.2 7.6 7.8 7.7 7.8 8.0

1992 21.4 13.2 8.2

1993 1994 1995 1996 1997 21.5 21.4 21.7 22.4 22.7 13.4 13.5 14.1 14.6 15.1 8.1 7.9 7.6 7.8 7.7

1998 1999 2000 22.2 21.7 21.7 15.0 14.1 14.7 7.3 7.5 7.1

Notes: Unless otherwise noted the sources are: national authorities & World Bank/IMF staff estimates. Data for 1998/99 are preliminaqdestimates. Azerbaijan: public investment includes mostly government investment as investment by state owned units is considered negligible. China: private investment includes: investment by collective-owned units, joint-owned units, share-holding units, foreign-hnded units, Hong Kong-Macao-Taiwan-fded units and by individuals. Costa Rica: due to the revisions of the National Accounts methodology data for private, public investments are unavailable for 1999. Brazil: source-1990-1998: FIBGE e Centro de Estudos de Economia e Govemo/IBRE/FGV, previous years World Bank. Private investment includes investment by enterprises controlled by state and local municipalities for the period 1990-98. Kazakhstan: public investment includes mostly government investment as investment by state owned units is considered negligible. Korea, Republic of: source-Economic Statistics Yearbook various issues. Mauritania: 1999 private investment data are not available. Mexico: 1988-99 data based on a new INEGI methodology. Morocco: up to 1990 public investment are estimated by investment of 14 biggest public companies; 1990-1999 data for the whole economy. Papua New Guinea: 1999 data are unavailable. South Africa: source-Quarterly Bulletin of South African Reserve Bank.

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